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July 12, 2023

The manufacturing industry is driven by efficiency and productivity, and the search to fulfill these goals requires KPIs that light the way for improvement. One of the key metrics used to measure the performance of manufacturing equipment is Overall Equipment Effectiveness (OEE).

What is OEE?

OEE is a metric that measures the effectiveness of manufacturing equipment by comparing the actual production output to the maximum possible production output. 

OEE is calculated by multiplying Availability, Performance, and Quality:

  • Availability is measured by the percentage of time the equipment is available for production.
  • Performance is measured by the rate of maximum production speed achieved by the equipment.
  • Quality is measured by the percentage of defect-free products produced by the equipment.

How Machine Data Impacts OEE

Machine data plays a crucial role in calculating OEE. Machines generate vast amounts of data during production, including uptime, downtime, speed, performance, condition, and quality. This data is captured by sensors and stored in the machine's control system. By analyzing this data, manufacturers can identify trends in machine performance, optimize production processes, and improve OEE.

How Machine Data Impacts Areas Related to OEE

Quality is another critical factor in OEE. High-quality products are essential for customer satisfaction and brand reputation. By monitoring quality data in real time, manufacturers can identify issues and take corrective action before they impact production. This process reduces the likelihood of defects and improves OEE; the need to rerun production to replace scrapped and defective parts decreases.

Inventory management impacts OEE as well. Maintaining optimal inventory levels ensures production lines operate at maximum capacity. Overstocking can lead to waste and increased costs, while understocking can cause production delays and downtime. By using software that leverages real-time data and analytics, manufacturers can optimize inventory levels and improve OEE.

OEE is also intricately linked to supply chain management. The same real-time data and analytics applied to other aspects of the operation empower planners to monitor the supply chain. With end-to-end visibility, they can take corrective action as or before problems arise, reducing the likelihood of production delays and downtime. They can also proactively enact quality and expiry protocols, manage vendor relations, and score supplier performance.

How to Improve OEE

To improve OEE, manufacturers need real-time data and analytical insights. A Manufacturing Execution System (MES) is a software platform that provides real-time visibility into production processes, allowing manufacturers to monitor machine data, quality, inventory, and the supply chain in real time.

MES software collects data from sensors and other sources, analyzes it, and provides insights that manufacturers can use to optimize their processes. They can identify areas for improvement and take corrective action quickly, improving OEE. This real-time visibility can be used to supply other software systems (SCM, CMMS, QMS, etc.) to extend its reach and impact to the benefit of OEE. 

MES software also provides real-time insights into inventory levels, allowing manufacturers to optimize levels and reduce waste. As a result, they can keep their production lines running at maximum capacity, improving OEE.

Launch Your OEE to New Levels

Modern manufacturing requires complete visibility, access to real-time data, and advanced analytics extended across the entire internal supply chain. A best-in-class MES solution will help align and improve your processes and increase your OEE significantly.

Contact us to find out how, or read our Smart Manufacturing Buyer's Guide to learn more about the technology forces available to improve your OEE with a strong digital foundation. 

About the Author

Plex DemandCaster Supply Chain Planning

Since joining forces with Plex, by Rockwell Automation, in 2016, we’ve harnessed the power of its Smart Manufacturing Platform and industry knowledge to offer a digitized supply chain planning product. It seamlessly unites your business from the plant floor to the executive suite. To learn more about how we are bringing the Connected Enterprise to life across industrial enterprises, visit

Plex DemandCaster